Debt recovery solicitors in Scotland

Commercial debt recovery in Scotland

Late payment is one of the biggest threats to a healthy business. When customers do not pay, your own suppliers, staff and tax bills still need to be paid, and your business’s cash flow suffers. Our specialist debt recovery team acts for creditors of all sizes, from sole traders and partnerships to limited companies, to recover outstanding debt in a way that fits the amount owed and the relationship you have with the customer.

We take a practical, cost effective approach. Many debts are paid as soon as a solicitor becomes involved, so we always start with the quickest and cheapest step that is likely to work. Where a customer ignores us or disputes the claim without good reason, we are ready to raise court proceedings and to take enforcement action once decree is granted. Unlike a debt collection agency, our debt recovery lawyers can give you legal advice on the strength of the claim and take the case all the way through the courts in Scotland if needed.

Our debt recovery service covers the whole of Scotland from our office in Glasgow, and we can act in Sheriff Courts throughout Scotland, including Glasgow, Edinburgh, Aberdeen and Dundee.

Debts we recover

We recover a wide range of commercial debts, including:

• Unpaid invoices for goods and services
• Trade credit and account balances
• Rent and service charge arrears
• Sums due under contracts and guarantees
• Loans and directors’ loan accounts
• Professional fees
• Bounced or stopped payments
• Debts owed by former customers who have moved on

Where a debt is undisputed, debt recovery in Scotland is usually straightforward. Where the customer raises a dispute about the quality of work or the amount due, we assess the strength of your claim and advise on the best route to recover debts, which may include negotiation, mediation or other dispute resolution as well as litigation.

Steps before court action

Court action is not always needed. Before raising proceedings, we will usually:

• Review your paperworkYour contract or terms of business, invoices, statements and any correspondence, so we know the claim is sound and who is legally liable to pay it.
• Check who owes the moneyWhether the customer is a company, partnership or individual, and whether they appear able to pay the debt, so you do not spend money chasing a business with no assets.
• Send a letter before actionLetters before action are formal demand letters from a solicitor, giving a short deadline for payment of the debt and warning of court action. This step alone recovers many debts.
• Claim interest and compensationAdding statutory interest and fixed compensation under the Late Payment of Commercial Debts (Interest) Act 1998, unless your contract sets a different rate.
• Agree a repayment planWhere the debtor wants to pay but needs time, we can put an instalment arrangement in writing that protects your position if they fail to pay.

Court action to recover debts

If the debtor does not pay, we raise a court action in the appropriate court. Which procedure is used depends on the amount you are owed:

• Simple procedureFor claims of £5,000 or less in the Sheriff Court. It is designed to be quicker and less formal, and the sheriff will encourage the parties to settle.
• Ordinary causeFor claims over £5,000 in the Sheriff Court. Claims of £100,000 or less must normally be raised in the Sheriff Court.
• Court of SessionLarger or more complex commercial claims can be raised in the Court of Session in Edinburgh, which has a dedicated commercial court.

Most debt actions are not defended. If there is no response, we ask the court to grant decree in your favour without a hearing. If the claim is defended, we take the court process forward and keep you updated on costs and prospects at every stage.

In some cases we can ask the court at the outset for arrestment or inhibition on the dependence of the action. This freezes funds or property while the case is decided, so assets cannot be moved out of reach.

Enforcing a decree

A court decree orders payment, but some debtors still do not pay. In Scotland, enforcement is called diligence and is carried out by sheriff officers. Sheriff officers can arrest funds in a bank account straight away. For earnings arrestment and attachment, they must first serve a charge for payment, which gives the debtor 14 days to pay, or 28 days if they are outside the UK or their whereabouts are unknown. The main options are:

• Arrestment of bank accountsFreezing money held in a bank account.
• Earnings arrestmentDeductions from an individual debtor’s wages.
• InhibitionPreventing the sale of, or borrowing against, land and buildings the debtor owns.
• AttachmentSeizing and selling goods and business assets.

Where a company cannot pay its debts, insolvency proceedings may be the right step. A company can be wound up if it fails to pay a statutory demand for more than £750 within 21 days, or if a charge for payment expires without payment. An individual or partnership can be made bankrupt, known in Scotland as sequestration, where the debt is at least £5,000. We will advise you on whether this is likely to get you paid, as you may only receive a dividend alongside other creditors. See our insolvency page for more.